The Cabinet Committee on Economic Affairs (CCEA) on Tuesday approved a mechanism for revision of ethanol price procurement by state-run oil marketing companies such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL).
Months before Maharashtra and Haryana, which are among the top cane-producing states, are set to go to polls, the CCEA increased the prices of ethanol from ‘C’ heavy molasses and ‘B’ heavy molasses by 29 paise per litre and ₹1.84 per litre per, respectively. Subsequently the ‘C’ heavy molasses and ‘B’ heavy molasses will be priced at ₹43.75 per litre and ₹54.27 per litre, respectively. In addition, the price of ethanol from sugarcane juice, sugar and sugar syrup has been fixed at ₹59.48 per litre.
“The remunerative price to ethanol suppliers will help in reducing the arrears of cane farmers, in the process contributing to minimizing the difficulty of sugarcane farmers,” the government said in a statement.
This comes in the backdrop of the central government’s plan to double farmers’ income by 2022.
{{/usCountry}}This comes in the backdrop of the central government’s plan to double farmers’ income by 2022.
{{/usCountry}}This will also help reduce pollution and strengthen India’s resolve towards fulfilling its COP21, the UN Climate Conference, commitments. The blending of ethanol and petrol had increased four times since 2014, and the aim was to increase it to 10%. Ethanol blending in petrol increased from 38 crore litres in 2013-14 to about 141 crore litres in 2017-18.
Petroleum minister Dharmendra Pradhan said OMCs will procure 260 crore litres of ethanol in 2019-20, which will help in reducing India’s energy import dependency. Next year India would save $1 billion in crude oil imports on this count, he added.
The National Biofuels Policy passed earlier by the NDA government will help India’s efforts to curb energy imports and carbon emissions. The policy, aimed at improving farmers’ income, expanded the scope of raw material for ethanol production to include sugarcane juice, sugar beet, sweet sorghum and starch containing materials such as corn, cassava, and damaged grains.
Earlier, the government had approved the policy for the 2019-20 sugar season involving an export subsidy of Rs10,448 per metric tonne (mt) to sugar mills. Around ₹6,268 crore will be transferred directly to farmers.
The move is aimed at countering the surplus sugar stock’s impact on prices. The move will help farmers, a politically sensitive constituent that the National Democratic Alliance government, is seeking to connect through various policy interventions.
Rural distress was a key issue in the run-up to the Lok Sabha polls, and the Bharatiya Janata Party (BJP) government was not taking any chances. Rural woes, particularly in Maharashtra, are acute with floods in the western part of the state, and the drought-like situation in the eastern part.
The Tuesday’s decision assumes importance given that India is the world’s third-largest oil importer, with oil imports increasing by over 25% in FY18 to $109 billion from a year ago. Also, Prime Minister Narendra Modi had in March 2015 set a target of lowering import dependence on oil by 10 percentage points to 67% by 2022, when the country celebrates 75 years of independence.
In July, the Union Cabinet approved the creation of a buffer stock of 4 million tonnes of sugar at an estimated cost of ₹1,674 crore. The step was aimed at increasing wholesale prices of sugar and improving cash flow to sugar mills, which in turn would help mill owners to clear farmers’ dues.
Last December, rural distress had cost the BJP two assembly elections in Madhya Pradesh and Chhattisgarh, and the party was not willing to take any chances this time around. In fact, the announcement is expected to further cement the BJP’s support base among farmers before the state assembly elections.